The Dividend Cafe

Today's Post - https://bahnsen.co/3Mz8Q5k All eyes are on the talks between Speaker McCarthy and President Biden regarding the debt ceiling and what negotiated bill may or may not be possible. They met earlier today and re-convene this evening. Over the weekend, President Biden said they were considering invoking the 14th amendment to declare the debt ceiling unconstitutional, something he previously said was a non-option. Most pundits do not believe it will go there, and if it were to, the Supreme Court would certainly have to take it up immediately with almost no chance of the court ruling with the White House. Discretionary spending caps are reportedly the new sticking point, which is just dumbfounding to me. (00:00) Introduction (00:45) Markets Today (02:00) Is it Sustainable? Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/458Bjr7 Everybody is aware of the challenges that have surfaced in regional banks this year and the fears that such problems will become more contagious in other banks as well (other regionals, smaller banks, community banks, etc.). I am not sure that the reasons for the challenges are fully understood, and that is partially because, in the immediate aftermath of the Silicon Valley Bank failure, some may have been quick to find a simplistic explanation that confirmed their priors as opposed to the more nuanced and multi-faceted explanations that were probably more accurate and helpful. Regardless of how the three bank failures of 2023 came to be and how people have thought about or processed those failures since they occurred, there are forward-looking questions that many are asking. The answers to these questions have ramifications for three different categories of economic actors. And those three categories around the future of banks, systemic risk, and general real estate investing in our country (amongst other things) are the subject of today’s Dividend Cafe. If you aren’t tantalized yet, you will be. Jump on into the Dividend Cafe … Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/42OsEsd Welcome to DC Today, I am Trevor Cummings filling in for David Bahnsen. Today we have an update on unemployment claims, existing home sales, daily market moves, and even Donald Trump shows up in today’s Ask David. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3OnePfQ So markets rallied hard today as both sides in this Biden/McCarthy negotiation assured listeners that a default won’t happen. Here’s the lay of the land in the debt ceiling debate: It is fair to say “deadlines” thrown out for various actors in this are more bark than bite – negotiating tactics and all that stuff. No one can really say when they have to start prioritizing payments because they don’t know what exactly June 15 tax receipts will look like. There will be lots of “rounds” in this negotiating process The White House largely believes it is more to their political benefit to be seen as getting a deal done than to be seen as fighting with the Republicans Noise is not material to a portfolio. One need not know what happens between now and whatever the X date is to know that on the other side of the X date, it will be like this noise never happened. For us contrarians, it is worth noting that cash levels are now the highest they have been all year and bond allocations are the highest they have been since 2009. And the recent Bank of America survey had money managers the most pessimistic as they have been all year. Keep this up, and we may end up seeing a full-blown boost of economic expansion … =) Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3IgucD9 All eyes were on the White House today as debt ceiling talks continued. The report after talks ended today that “no deal has yet been reached” was, ummm, not a story. I remain skeptical that a real deal gets done before there is a real deadline and moment of hysteria, but I do still believe these talks set the foundation for what that eventual deal will, in fact, be. The word that the White House is willing to accept discretionary spending caps, clawing back unspent COVID dollars, and work requirements for some social safety net programs, if true, does seem to me to mean a deal will likely, in the end, get done. But there is a lot of wood to chop, as the great Rene Aninao likes to say. As for all that recession talk, estimates are still for a slightly up quarter in terms of real GDP growth for Q2, but with Q3 and Q4 being the likely entry period for GDP contraction. Chapter 11 bankruptcies were up +43% in Q1 versus Q1 of last year. Now, bankruptcies a year ago were down -32% from the year prior, so there was clearly a low base effect going on. But overall, I do believe we are seeing increasing problems surface in small businesses where access to funding is becoming an issue. With all the talk about the U.S. dollar year-to-date, I thought it worth pointing out that while the Euro is up a whopping +1.8% YTD to the dollar on the year, and the sterling pound is up +4% to the dollar, the U.S. dollar is actually up versus Chinese renminbi, Yen, South Korean Won, South African Rand, and Australian dollar. In other words, people have no idea what they are talking about. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Debt ceiling talk and other cool things today in the special Monday edition of DC Today … Today's Post - https://bahnsen.co/3o2Wdad Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3ptUr29 We are going to do something a little different today in the Dividend Cafe, or at least different from what I normally like to do. While “current conditions” are less interesting to me in the Dividend Cafe, various macro themes and long-term trends represent the focus of this weekly missive. That said, every now and then, the news cycle and state of affairs in financial markets warrant a little “refresher,” and that is what today’s Dividend Cafe will be. Come for the debt ceiling talk; stay for the first principles. Perk up your ears around election talk; tune in (or out) on recession chatter. We have all the things today – even the things I hate talking about most. It’s a “lay of the land” Dividend Cafe … Jump on in! Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3MjilGN The Ask David is so long below I will put most of the writing attention on that today (see below). Interest rates all dropping and fed rate expectations in the futures markets strike me as the major market story of the day (and week). And seeing bond yields collapse on the front end of the curve in perfect concert with the media wailing over imminent debt default is, well, a perfect encapsulation of everything. People are paying higher prices and accepting lower yields for something about to default, eh? Okay. Off we go … Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/44MFjx8 So the CPI today came in today at 4.9% year-over-year, the lowest we have seen now since April of 2021. 5% had been expected so it is another month of slightly lower than expected year-over-year movement. And yet … Shelter is showing an +8.1% year-over-year price inflation still now in April. Yep. +8.1%. So, at the 34% weighting you can surmise that 2.75% of the inflation is, well, poppycock. That puts the actual present CPI somewhere between 2% and 2.5% which last time I checked is the Fed’s target. Used car prices are down -6.6% on the year (deflation). Gas utilities are down -2.1%. Medical care was only up +0.4% on the year. Food and transportation, though, are still showing higher annualized price increases. It is interesting to hear people talk about a slowing job market as Job Openings (JOLTS) started the year at 11.2 million and are now at 9.6 million. I am not sure I have ever heard nearly 10 million unfilled job openings described as a “slowdown” before, but you do you boo. Now, the CEO of ZipRecruiter did come out and say, “demand for recruiting services is declining” – which may mean things are slowing down (and also may mean hiring is so easy right now less people feel the need to use recruiters, but I digress). I do think there is no question that companies are paring back new hires, but I also think some industries (see: tech) were way, way, way over-hired. Bottom line, I don’t see anything contradictory (or complicated, for that matter) about saying these two things at once – (1) The job market is good; (2) It may be headed towards “less good” than it has been. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/42ACgWM The total amount of commercial bank deposits that have left the banking system since the Fed began hiking rates is now just shy of $1.1 trillion. Money market mutual funds have taken in $751 billion. Of the total aggregate move higher in the S&P 500 so far this year, 93.5% of it has come from the 20 largest companies in the index, with 6.5% coming from the remaining 480 companies. This is not the stuff sustainable market moves are built on. CPI comes tomorrow along with more hand-wringing on the debt ceiling. Good times … Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com